The impetus for “microcredit”—the extension of very small business loans to impoverished borrowers who often lack collateral, steady employment, or a credit history—was mainstream finance’s unwillingness to deal with the poor, which, in turn, was widely believed to perpetuate the cycle of poverty. When Bangladesh was hit by famine in 1974, Mohammad Yunus, an economics professor, popularized the concept with the launch of his now-famous Grameen Bank. For his efforts, Yunus was awarded the Nobel Peace Prize in 2006. But just how successful has microcredit been in breaking the poverty trap in developing countries?
“Of all the development fixes devised during the neoliberal era, nothing has captured the hearts, minds and pockets of the international development community, philanthropists, and key Western governments quite as much as microcredit” write Milford Bateman of Juraj Dobrila University of Pula (Croatia) and UNCTAD’s Stephanie Blankenburg and Richard Kozul-Wright, editors of “The Rise and Fall of Global Microcredit: Development, Debt and Disillusion” (Routledge, 2018).
Released on November 7, during the opening day of the Intergovernmental Group of Experts on Financing for Development at the Palais des Nations in Geneva, the book is a definitive assessment of where—and how—microfinance went wrong.
For viewers seeking a synopsis, the Virtual Institute (Vi) captured the essential points from the authors’ presentations during the book-launch. We particularly recommend co-editor Blankenburg’s talk on what developing countries need for successful structural transformation, why it is so difficult to pull off, and the implications for microfinance in the context of current globalization trends.
Vi also had a chance to chat with co-editor Bateman, who discussed the theory
The book launch also featured a fascinating new UNCTAD publication, “The Ins and Outs of Inclusive Finance: Some Lessons from Microfinance and Basic Income,” which, alongside microfinance, examines the concept of universal basic income (UBI), now a hotly debated policy proposal everywhere from Rome to Chicago. UBI, unlike microfinance, appears to be an idea whose time has come, writes contributor Guy Standing of the School of Oriental and African Studies (U.K.) and co-founder of the Basic Income Earth Network. The Virtual Institute had the chance to visit Prof. Standing at his home in Geneva, where he offered his take on the powerful promise of UBI as a poverty-fighting tool.